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Are Big Cities Really Bad Places to Live? Improving Quality-of-Life Estimates across Cities

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David Albouy

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Abstract

The standard revealed-preference hedonic estimate of a city’s quality of life is proportional to that city’s cost-of-living relative to its wage-level. Adjusting the standard hedonic model to account for federal taxes, non-housing costs, and non-labor income produces quality-of-life estimates different from the existing literature. The adjusted model produces city rankings positively correlated with popular-literature and stated-preference rankings, and predicts how housing costs rise with wage levels, controlling for amenities. Mild seasons, sunshine, and coastal location account for most quality-of-life differences; once these amenities are accounted for, quality of life does not depend on city size, contrary to previous findings.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 14472.

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Date of creation: Nov 2008
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Handle: RePEc:nbr:nberwo:14472

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Find related papers by JEL classification:
H4 - Public Economics - - Publicly Provided Goods
J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters
R1 - Urban, Rural, and Regional Economics - - General Regional Economics

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. David Albouy, 2009. "What Are Cities Worth? Land Rents, Local Productivity, and the Capitalization of Amenity Values," NBER Working Papers 14981, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Matthew E. Kahn, 2007. "New Evidence on Trends in the Cost of Urban Agglomeration," NBER Chapters, in: The Economics of Agglomeration National Bureau of Economic Research, Inc. [Downloadable!]
  3. Jordan Rappaport, 2008. "The affordability of homeownership to middle-income Americans," Economic Review, Federal Reserve Bank of Kansas City, issue Q IV, pages 65-95. [Downloadable!]
  4. Tara Watson & Sara McLanahan, 2009. "Marriage Meets the Joneses: Relative Income, Identity, and Marital Status," NBER Working Papers 14773, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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